Saincheisteanna Tráthúla - Topical Issue Debate

Insurance Costs

Small to medium-sized enterprise, SME, is critical to the health of the Irish economy. Foreign direct investment is important but it is seen by this Government as the glamorous side of enterprise policy while small to medium-sized businesses are worthy but are treated like the poor relation. Plenty of lipservice is given to them but all it really amounts to is platitudes with no real support or help. Indigenous SMEs are represented by a junior Minister without the necessary supports or policy initiatives. Ireland has made very little effort to create a Mittelstand-type of enterprise that is indigenous but is able to compete with international firms. SMEs in this country are struggling for a number of reasons. They are struggling because of creaky or non-existent infrastructure, because business rates do not take the profits of a business into consideration and because retail is migrating to the Internet and they are not getting the proper supports with regard to it.

One of the reasons most businesses tell me they are struggling is that input costs are going through the roof. One of those input costs is insurance. Frustration is building up in the SME sector because the Government has given up on insurance reform. I have some experience of this. I was involved in a car accident about two years ago. After the accident, a solicitor said to me "Why not put in a claim as I can you ten grand for everybody who was in the car?" That worked out at €60,000 and I would not even have had to turn up at whatever decision-making process was involved. That would be very tempting for any family in the country but that money does not come from thin air. It comes from somebody's pocket. It is the process that is putting drivers, particularly young drivers in rural areas, off the road and putting businesses out of business on a regular basis.

The Government has spent the past two years doing sweet damn all on this issue. Reform has stopped dead. It is not just me saying that. ISME, which is the representative organisation for SMEs, has stated that Government reform of insurance has stopped dead. I have been told by a number of representatives that businesses simply will not last to the end of the year and that thousands of jobs are in danger of being lost. The Minister of State has met one business owner, Linda Murray, a number of times. She is involved in the Alliance for Insurance Reform and owns a small business - a play centre - in County Meath. Her insurance costs have spiralled from €2,500 to about €16,000. She represents about 60 such play areas in the country, three of which have gone bust this year. She has stated that small businesses are simply being crucified by insurance costs. Many small businesses are not having their insurance renewed even though they have made no claims while equivalent companies in Great Britain see no difference in their insurance costs. Linda Murray has told me that she knows of a play centre that is paying €50,000 for insurance. One such business in this city is paying €135,000 per year. One insurance company has stated that any business that caters for children of a certain age will soon be obsolete. Another large insurance firm has stated that it will no longer insure dance classes and outdoor playgrounds and is considering not insuring sports. Why is the Minister of State not dealing with this crisis? Why is the Government sitting on its hands and not holding vested interests in this area to account?

The Deputy said it. He does not know what he is talking about. I thank Members of the House who have facilitated me in terms of insurance legislation passed last year. It includes the Insurance (Amendment) Act to give effect to the Supreme Court decision regarding Setanta and the Central Bank (National Claims Information Database) Act. The Minister for Jobs, Enterprise and Innovation is responsible for the Personal Injuries Assessment Board (Amendment) Act, which was also passed. I compliment and thank all Deputies and Senators for getting that through.

Regarding the Deputy's comments about the hospitality sector and, in particular, play zones, I have met with many people in those sectors and there are issues. The issue is the levels of award. It is as simple as that. A bang, scratch or cut can get €10,000 or €15,000, which is outrageous. The companies are paying these sums rather than presenting in court because it is a good commercial decision on their part. If they go to court, they present in front of a judge, the case involves a child and the award is paid at that level plus costs. The insurance company has the commercial decision to make. Does it pay this, get it over with, take the pain early and get out the door? What does it then do? It passes on the increased premium to its customers. This is what it comes back to.

Two issues arise here. If the Deputy wants to be helpful and facilitate me, we must pass the Judicial Council Bill as soon as it is presented. I was not to know that this Bill would get stuck behind the Judicial Appointments Commission Bill in Seanad Éireann with a filibuster. I had hoped and anticipated that this legislation would been concluded in 2018 along with the Insurance (Amendment) Act, the Central Bank (National Claims Information Database) Act and the Personal Injuries Assessment Board (Amendment) Act. If the Deputy wants to be positive, he should come on board and support that Bill. What that Bill will do is present, in line with the Personal Injuries Commission, the opportunity for members of the Judiciary to put in place new guidelines for levels of awards. I am challenging the Deputy to come on board and facilitate that legislation.

Another Bill I want to get through the House as soon as possible is the Consumer Insurance Contracts Bill, which is a Sinn Féin Bill. The Deputy may be aware of it. I am not satisfied with the interaction between insurance companies and their customers. The customers of insurance companies buy their product and subsequently are being badly treated because, as I said earlier, there is nothing easier than to pay the award and upload the premium on the person buying insurance.

Insurance companies cannot have it every way. We have worked hard to put a better structure in place to ensure that companies are profitable and that we have a sustainable insurance sector but we are not getting fair play from the companies. They are increasing premiums and are now very profitable. Aviva had profits €113 million, FBD had profits of €15 million while RSA had profits of €35 million - over €200 million between them. That is not fair play at all when it comes to the customers of these companies.

For the record, it is not just me who is saying the Government is sitting on its hands with regard to insurance reform and that insurance reform is dead in this country. It is the representative organisations of small businesses which are paying these massive premiums and which are being put out of business that are saying this. It always interests me that Fine Gael likes to give the impression that it is the party of small business yet it stands over the distorted market that exists. It is interesting that the Minister of State said that it is not his fault but the fault of the insurance companies.

The insurance companies operate under the legislative environment the Minister of State creates. He is unwilling to take on the vested interests, and I will give him one example of this. He is unwilling the deal with the legal lobbies. One way in which he could do so would be to deal with the caps on damages. He mentioned how shocking it is that people with soft tissue injuries can get massive payouts on claims. In his own words, however, when talking to some of these representative groups, his view was that the average payout for soft tissue injuries should perhaps be reduced from €30,000 to €20,000. This is outrageous.

This shows that this is clearly not even in the right ballpark. It is incredible. I know of a situation in which a family with a young child who had a small cut, not a serious cut, in 2014 made a claim again in 2019. We know of situations in which claims for about €6,000 are going to court but are resulting in legal costs of €26,000. How can the Minister of State stand over a system such as this? How can he stand over a system in which the legal costs are so high that only about 6% of claims make it to court and in which the insurance company just settles in 94% of the cases because of the legal costs involved? What about regulating claims management companies? What about setting up a Garda insurance fraud squad? The Minister of State promised a Garda insurance fraud squad. Where is it?

I ask Deputy Tóibín to let the Minister of State to conclude. Let me make it clear: I am chairing this debate. I am not aware of who said what or whether or not it is correct, but both the Minister of State and Deputy Tóibín are long-term parliamentarians and I am sure we can check the record and resolve the matter.

I wish to be very clear about the award levels. There are three pieces of work concerning award levels for soft tissue claims: one by the Department of Finance, which found that awards here were five times those awarded in the UK; one by PIAB, which states they were five times higher; and one by the Personal Injuries Commission, which states that award levels in the Irish jurisdiction are 4.4 times what they are in the UK. I want to see the awards reduced in line with the PIAB report, the Department of Finance report and the Personal Injuries Commission report. Those are the levels. This is not about 10%, 20% or 30%. This is to bring the award levels down in line with other jurisdictions, namely, England and Wales.

The Garda insurance fraud squad is a matter for the Garda Commissioner. I presented what was presented to me prior to my coming into this position. The Garda Commissioner will not accept the establishment of payment to An Garda Síochána from outside of the national Exchequer.

That is done. What I have asked the Garda Commissioner to do is to establish within the Garda national economic crime bureau an insurance section to deal with these matters directly. However, Deputy Tóibín gives no credit to anyone, including people who are working particularly hard to bring down the cost of insurance for companies. I have one objective in this, that is, that the customers of the insurance companies are able to continue trading in order that they can provide services and have a vibrant sector. The Deputy can come on board and facilitate me in this with the two Bills that are required to be passed very quickly through this House and then he will be able to say he has done this State some service.